How The EU Threatens London

On Thursday 1st. July 2010 the agenda for the July European Parliament plenary session in Strasbourg the following week was changed at the last moment. In place of the previous business, half a dozen major new reports were tabled, comprising over 1500 pages along with hundreds of detailed amendments.

Such late tabling ensured that there was wholly insufficient time for MEPs and their staff properly to analyse the detail of these massive reports with a view to voting upon them on the following Wednesday 7th. July. This was despite the fact that many of the amendments simply changed the word ‘community ‘ to ‘union’, a tell-tale sign that these proposals have been sitting in the files for years waiting for a crisis which would justify a further massive transfer of power to the EU Institutions.

Moreover, in the planned votes, the “powers that be” proceeded to bring together the Socialists, the Christian Democrats, the Liberals, the Greens and, in some instances the European Conservatives, to introduce block amendments which would ensure that little meaningful voting could take place on the detail.

Amongst Parliamentarians, it seems that only UKIP spotted what was happening and began to fight it, preparing detailed briefings and alerting the UKpress.

What is causing UKIP so much alarm is that these documents create the ESFS (the European System of Financial Supervision).

Within the ESFS are a series of supervisory authorities which will create five major new EU institutions:
European Supervisory Authority (Securities and Markets)
European Supervisory Authority (Insurance and Occupational Pensions)
European Supervisory Authority (Banking)
European Supervisory Authority (Joint Committee)
European Systemic Risk Board


The powers given to the new bodies are fundamental enabling powers.
All institutions will have:
• Supervisory Powers over financial institutions of every kind across the whole of the EU
• An all-encompassing emergency powers clause
• The right to demand compliance by any specific Member State Government or institution
• A Resolution Unit with comprehensive powers
• The principal European Supervisory Authorities (S&M, I&OP, Banking) will be underpinned by a stability fund financed by a compulsory EU-wide levy.

This will be EU legislation – and all must comply.

Parallel to the proposals to create an integrated level of supervision at both micro and macro levels, the European Commission proposed a package of measures revising the existingsectoral directives, mainly in the field of banking and securities, in order to adapt them to the new financial supervisory architecture.

The eleven sectoral directives amended by what is called ‘Omnibus I’ are:
1998/26/EC: Settlement Finality Directive
2002/87/EC: Financial Conglomerates Directive
2003/6/EC: Market Abuse Directive
2003/41/EC: Institutions for Occupational Retirement Provisions Directive
2003/71/EC: Prospectus Directive
2004/39/EC: Markets in Financial Instruments Directive
2004/109/EC: Transparency Directive
2005/60/EC: Anti Money-Laundering Directive
2006/48/EC and 2006/49/EC: Capital Requirements Directive
2009/65/EC: Undertakings for Collective Investments in Transferable Securities Directive, UCITS
A further ‘Omnibus II’ will deal with solvency.

It will be clear from all this just how comprehensive, fundamental and wide-ranging, these measures are. Any suggestion that they are “technical” and of little practical significance would be laughable were the proposal not so serious a threat to the City of London, Britain’s right to control its own financial institutions and the British economy.

The goal is explicit at various points in the vast verbiage. In a report from the Committee on Economic and Monetary Affairs’ Rapporteur Ramon Tremosa i Balcells, the Explanatory Statement says: “The EU needs a new financial architecture with an integrated micro prudential supervision including a transfer of power to the EU” .

This, of course, runs entirely counter to the assurances that EU Heads of Government and Eurocrats gave with the passage into force of the Treaty of Lisbon to the effect that there would be no further transfers of power to the EU for a long period to come. Arguably, it also places the UK Coalition Government in considerable difficulty as the Tories have signalled that any further transfers of power to the EU would be resisted and put to a Referendum of the British People.

In addition, the proposals involve massive recording and retention of 
information. For example, the European Securities and Market Authority is tasked to establish a public register of all tied agents of investment firms throughout the European Union. This will be published on a website, one of several proposed in the legislation.

The activities of Member States are to be subject to detailed control, often at a micro-level. For example, Member States are told that they:
“Shall require credit institutions to obtain authorisation before commencing their activities. Without prejudice to Article 7 – 12, they shall lay down the requirements for such authorisation and notify them to the EBA” .

In another proposal in order to ensure consistent harmonisation, the European Banking Authority is to develop draft technical standards and guidelines for the convergence of supervisory practices. In other words, the way things are run will be dictated from Frankfurt.

The micro management even extends to the remuneration of the Directors of listed companies. A resolution on a report from Rapporteur Saïd El Khadraoui sets out detailed requirements on the levels and terms of remuneration that are to be permitted. In effect an EU-wide incomes policy for banks and other financial institutions is to be implemented. Although a resolution has no legal effect, it is well known that what starts as a resolution generally ends as a Directive or regulation i.e. part of EU law.

All of this comes from an organisation which is itself so financially incompetent that for over a decade it has failed to get its own accounts signed off.

Despite – or perhaps because of – the EU’s bureaucracy and incompetence, UKIP’s view is that the threat is fundamental and, to understand what is happening, all this needs to be set in a historical context.

Modern banking began in Reformation northern Italy. By the Seventeenth century, the lead had transferred to Amsterdam based around the success of the Dutch mercantile empire. London replaced it as the British Empirebegan to rule the waves and world markets.

But London’s position is not held by some form of divine right. In other words, the global lead shifts from place to place. New York and Tokyo have grown to create a tri-polar structure but London at least retains European primacy – for the moment.

The threat is two-fold:

• with the ESFS having massive powers to codify, regulate and interfere based on a bureaucratic Euro-zone agenda, key financial business and innovation will leave the EU – and thus London – altogether,

and

• with the new Institutions centred on Frankfurt, that is where what remains will increasingly locate itself.

So will the Summer of 2010 go down in the history books standing alongside those of 1914 and 1939 as a disaster for British prosperity and world-standing – but from a far more subtle and insidious threat?

And will it be written that the new British Coalition Government, almost all ofwhose MEPs supported or abstained on the legislation, stood idly by and did absolutely nothing to try to stop it, let alone tell the British public what was happening!

Godfrey Bloom MEP, coordinator on the Economic and Monetary Affairs Committee of the European Parliament. 

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